UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For quarterly period ended June 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 33-80659
COMPARE GENERIKS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 11-3289396
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
300 Oser Avenue
Hauppauge, New York
(Address of principal executive offices)
11788
(Zip Code)
(800) 342-6555
(Registrant's telephone number including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
Class Outstanding at August 7, 1996
Common Stock 3,890,000
<PAGE>
COMPARE GENERIKS, INC.
FORM 10-QSB
THREE MONTHS ENDED JUNE 30, 1996
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Balance sheet.......................................... 1
Statements of operations............................... 2
Statement of cash flows ............................... 3
Notes to financial statements ......................... 4-5
Item 2. Management's discussion and analysis
of financial condition and results of
operations.......................................... 6
PART II - OTHER INFORMATION
Item 1. Legal proceedings .............................................. 7
SIGNATURES............................................................... 8
<PAGE>
COMPARE GENERIKS, INC.
BALANCE SHEET
(Unaudited)
JUNE 30, 1996
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $1,413,215
Accounts receivable, net of $10,000 allowance
for doubtful accounts 110,959
Inventories 370,256
Prepaid expenses and other current assets 226,782
----------
Total current assets 2,121,212
----------
FURNITURE AND FIXTURES, net 20,607
INVESTMENT IN SUPERIOR SUPPLEMENTS, INC. 1,150,000
INTANGIBLE ASSETS, net 1,572,398
OTHER ASSETS 212,750
----------
$5,076,967
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 114,383
Due from affiliate 54,125
----------
168,508
----------
COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock, $.0001 par value, authorized
25,000,000 shares; 3,890,000 issued and
outstanding 389
Preferred stock, Class A, $.0001 par value;
authorized 10,000,000 shares; 5,000,000 issued
and outstanding 500
Preferred stock, Class B, $.0001 par value;
authorized 10,000,000 shares; 500,000 issued
and outstanding 50
Additional paid-in capital 5,273,344
Accumulated deficit (360,824)
----------
4,913,459
Less stock subscription receivable (5,000)
----------
4,908,459
----------
$5,076,967
==========
-1-
<PAGE>
COMPARE GENERIKS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Three Months
Ended Ended
June 30, 1996 June 30, 1995
NET SALES $ 508,458 $ -0-
----------
COST AND EXPENSES:
Cost of sales 252,839 -0-
Selling, general and administrative 344,568 -0-
Amortization of intangible assets 78,510 -0-
---------- ------------
675,917 -0-
---------- ------------
OPERATING LOSS (167,459)
INTEREST INCOME, net 20,812 -0-
---------- ------------
NET LOSS $ (146,647) $ -0-
========== ============
NET LOSS PER SHARE $ (.04) $ -0-
========== ============
WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK
OUTSTANDING 3,756,667 2,500,000
========== ============
-2-
<PAGE>
COMPARE GENERIKS, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, 1996 June 30, 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $(146,647) -
---------
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization and depreciation 109,997 -
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 124,337 -
Inventories (207,853) -
Prepaid expenses and other current assets (83,556) -
Other assets (138,750) -
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 27,189 -
Due to affiliate (179,050) -
----------
Total adjustments (347,686) -
----------
Net cash used in operating activities (494,333) -
----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of furniture and fixtures (17,456) -
Investment in Superior Supplements, Inc. (100,000) -
Acquisition of intangible assets (22,469) -
----------
Net cash used in investing activities (139,925) -
---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (634,258) -
----------
CASH AND CASH EQUIVALENTS, beginning of
period 2,047,473 -
----------
CASH AND CASH EQUIVALENTS, end of period $1,413,215 -
==========
</TABLE>
-3-
<PAGE>
COMPARE GENERIKS, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
THREE MONTHS ENDED JUNE 30, 1996 AND 1995
1. Basis of Presentation:
The interim financial statements furnished reflect all adjustments
which are, in the opinion of management, necessary to present a fair statement
of the financial position and results of operations for the three months ended
June 30, 1996. The financial statements should be read in conjunction with the
summary of significant accounting policies and notes to financial statements
included in the Company's Form 10-KSB for the fiscal year ended March 31, 1996.
The results of operations for the three months ended June 30, 1996 are not
necessarily indicative of the results to be expected for the full year.
2. Concentration of Credit Risk:
Financial instruments which potentially expose the Company to credit
risk, as defined by Statement of Financial Accounting Standard No. 105 ("FAS
105"), consists primarily of trade accounts receivable. Wholesale distributors
of dietary supplements and over-the-counter pharmaceuticals account for a
substantial portion of trade receivables. The risk associated with this
concentration is limited due to the large number of distributors and their
geographic dispersion.
3. Inventories:
Inventories, consisting principally of finished goods, at June 30, 1996
have been estimated using the gross profit method.
4. Investment in Superior Supplements, Inc.:
On May 31, 1996, the Company acquired 500,000 shares of common stock of
Superior Supplements, Inc. valued at $1,150,000.
-4-
<PAGE>
COMPARE GENERIKS, INC.
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 1996 AND 1995
(Continued)
5. Stockholders' Equity:
a. Net loss per share
Net loss per share is computed by dividing the net loss by the weighted
average number of common shares and equivalents outstanding during the period.
b. Issuance of stock
On May 31, 1996, the Company acquired 500,000 shares of common stock of
Superior Supplements, Inc. for $100,000 and the issuance of 200,000 shares of
the Company's stock. The value of the shares ($1,150,000) issued in connection
with this transaction have been determined using a fair value of $5.75 per share
representing approximately two-thirds of the market value of the Company's stock
at May 31, 1996.
6. Commitments:
On May 31, 1996, the Company entered into a three year Supply Agreement
with Superior Supplements, Inc. (SSI) which provides for SSI to supply the
Company with vitamins in bulk tablet form (other than any vitamins sold under
the "Energex" trade mark or as part of the "Energex" product line) at a price
equal to SSI's cost plus 15 percent.
-5-
<PAGE>
COMPARE GENERIKS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net sales, derived primarily from convenience stores and drug store
chains were approximately $508,000 for the three month period ended June 30,
1996. The gross profit on these sales was approximately $256,000 or 50 percent.
Selling, general and administrative expenses approximated $345,000 (68%
of sales) for the three month period ended June 30, 1996. The Company has
implemented marketing campaigns targeting convenience store chains for the
placement of product displays. In addition, the Company began radio advertising
in certain test markets in order to streamline its marketing efforts based on
demographics.
The Company realized a loss of approximately $147,000 for the three
month period ended June 30, 1996. The loss is principally attributable to the
amortization of intangible assets on a straight line basis and the
implementation of marketing campaigns.
On May 31, 1996, the Company entered into a three year Supply Agreement
with Superior Supplements, Inc. (SSI), which provides for SSI to supply the
Company with vitamins in bulk tablet form (other than any vitamins sold under
the "Energex" trade mark or as part of the "Energex" product line) at a price
equal to SSI's cost plus 15 percent.
Liquidity and Capital Resources
As of June 30, 1996, the Company had working capital of approximately
$1,953,000.
The Company's statement of cash flows reflects cash used in operating
activities of approximately $494,000 primarily due to increases in operating
assets such as inventories ($208,000), prepaid expenses and other current assets
($84,000), and other assets ($139,000).
The statement also reflects cash used in investing activities of
approximately ($140,000) which reflects an investment in Superior Supplements,
Inc. Common stock ($100,000), the purchase of furniture and fixtures ($17,000),
and acquisition of intangible assets ($22,000).
The Company expects to meet its cash requirements from operations and
current cash reserves.
-6-
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
There is no material litigation pending or threatened against the
Company nor are there any such proceedings to which the Company is a party.
-7-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMPARE GENERIKS, INC.
Dated: August 12, 1996 By: /s/Thomas A. Keith
-----------------------
Thomas A. Keith
President and Chief
Executive Officer
Chief Financial Officer
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
financial statements and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,413,215
<SECURITIES> 0
<RECEIVABLES> 120,959
<ALLOWANCES> 10,000
<INVENTORY> 370,256
<CURRENT-ASSETS> 2,121,212
<PP&E> 21,479
<DEPRECIATION> 872
<TOTAL-ASSETS> 5,076,967
<CURRENT-LIABILITIES> 168,508
<BONDS> 0
<COMMON> 389
0
550
<OTHER-SE> 4,907,520
<TOTAL-LIABILITY-AND-EQUITY> 5,076,967
<SALES> 508,458
<TOTAL-REVENUES> 508,458
<CGS> 252,839
<TOTAL-COSTS> 675,917
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (146,647)
<INCOME-TAX> 0
<INCOME-CONTINUING> (146,647)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (146,647)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
